Labor Department unveils final “Persuader Rule”
On March 24, 2016, the U.S. Department of Labor (DOL) issued the final version of its “persuader rule,” which requires employers, third-party lawyers and other labor consultants to disclose to the DOL any arrangement to persuade employees directly or indirectly concerning the right to organize or bargain collectively. These reports must be filed electronically and, once filed, become publicly available records.
Almost five years after it published the proposed rule, the DOL has finally announced that it is adopting “the proposed rule, with modifications, [providing] increased transparency to workers without imposing any restraints on the content, timing, or method by which an employer chooses to make known to its employees its positions on matters relating to union representation or collective bargaining.” The rule is scheduled to take effect on April 25, 2016, and will apply “to arrangements and agreements as well as payments (including reimbursed expenses) made on or after July 1, 2016.” The reporting obligation includes disclosure of all expenditures by employers and receipts by law firms related to persuader activities. Furthermore, according to the DOL, the “persuader rule” applies to labor relations governed by both the National Labor Relations Act and the Railway Labor Act.
Since 1959, the Labor Management Reporting and Disclosure Act (LMRDA) has required the disclosure of arrangements made between employers and labor consultants to persuade workers to oppose unionization or collective bargaining. The rule has generally applied only when a lawyer or consultant dealt directly with employees in an attempt to affect their support during the course of a union organizing campaign. As a result of the “advice” exemption, the reporting requirement has not been applied to lawyers offering advice and counsel to businesses about their rights and obligations under federal labor law. The advice of attorneys has not triggered any reporting obligation so long as (1) the client has been free to accept or reject the advice, and (2) the lawyer avoids direct communications with bargaining unit employees.
The new rule significantly narrows the advice exemption. Under the new rule, legal advice is still exempt, but only so long as there is no underlying purpose to persuade. Both the attorney and the client will be required to report all arrangements in which “an object” of the services is to persuade employees concerning their rights to organize and bargain collectively. DOL identified the following categories of activity as not covered by the advice exemption, and therefore reportable, if the purpose of the activity is to persuade employees:
- The attorney engages in direct contact or communication with any employee: or
- The attorney, without having direct contact with employees:
- plans, directs, or coordinates activities, including meetings and interactions with employees, that are undertaken by supervisors or other employer representatives;
- provides material or communications to the employer, in oral, written, or electronic form, for dissemination or distribution to employees;
- conducts a seminar for supervisors or other employer representatives; or
- develops or implements personnel policies, practices, or actions for the employer.
The activities listed in (2) generally are not reportable if they occur prior to the rule’s effective date.
Numerous business organizations plan to file lawsuits regarding the legality of this regulation, seeking court orders to block the implementation of the new regulation. Should a court grant a temporary restraining order in any of these suits, the Labor Department’s new requirements may be kept from going into effect during the pendency of the litigation. The principal argument likely to be made in these suits is the government’s improper imposition into attorney-client communications.
Although these changes are substantial, there will be more. This legal alert is just an overview of all the changes this 446-page regulation sets forth to take effect in late April. Our initial analysis of this new rule has uncovered numerous internal inconsistencies. We intend to review this lengthy regulation further and inform all of our clients on the entire scope of these changes soon. We are working diligently to ensure that our clients will be in compliance with the new rule’s requirements if the litigation fails.
First published on globalhrlaw.com.